Correlation Between Fednat Holding and American Financial
Can any of the company-specific risk be diversified away by investing in both Fednat Holding and American Financial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Fednat Holding and American Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fednat Holding Co and American Financial Group, you can compare the effects of market volatilities on Fednat Holding and American Financial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Fednat Holding with a short position of American Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fednat Holding and American Financial.
Diversification Opportunities for Fednat Holding and American Financial
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fednat and American is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Fednat Holding Co and American Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Financial and Fednat Holding is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Fednat Holding Co are associated (or correlated) with American Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Financial has no effect on the direction of Fednat Holding i.e., Fednat Holding and American Financial go up and down completely randomly.
Pair Corralation between Fednat Holding and American Financial
If you would invest 11,363 in American Financial Group on January 19, 2024 and sell it today you would earn a total of 1,178 from holding American Financial Group or generate 10.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 0.4% |
Values | Daily Returns |
Fednat Holding Co vs. American Financial Group
Performance |
Timeline |
Fednat Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
American Financial |
Fednat Holding and American Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fednat Holding and American Financial
The main advantage of trading using opposite Fednat Holding and American Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fednat Holding position performs unexpectedly, American Financial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in American Financial will offset losses from the drop in American Financial's long position.Fednat Holding vs. Suburban Propane Partners | Fednat Holding vs. Valhi Inc | Fednat Holding vs. NL Industries | Fednat Holding vs. NorthWestern |
American Financial vs. Selective Insurance Group | American Financial vs. Horace Mann Educators | American Financial vs. Kemper | American Financial vs. ProAssurance |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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